1. If large amount of capital were available
at low interest rates,
what would manufacturing industry spend it for?
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2. Likely candidates
Computer systems for sending shop floor
data to planners and cost accountants
Process Automation
CNC machines
Bigger, faster models of current machines
Robots
Automated storage and retrieval systems
Automated inspection equipment
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3. Assembly Plant Characteristics
(Averages for plants in each region)
J/J
Productivity (hrs/veh)
Quality (defects / 100 veh)
Space (sq ft / veh / yr)
Repair Area (% of assly area)
Inventory (days)
Job Rotation
(0=none, 4=frequent)
Suggestions (# / employee)
# of Job Classes
Training of new workers (hrs)
J/NA
16.8
60.0
5.7
21.2
65.0
9.1
25.1
82.3
7.8
36.2
95.0
7.8
4.1
0.2
3.0
61.6
11.9
380
4.9
1.6
2.7
1.4
8.7
370
12.9
2.9
0.9
0.4
67.1
46
14.4
2.0
1.9
0.4
14.8
173
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US/NA Europe
4. Questions Raised
Whether automation is the secret?
Does manufacturability of the product make
the difference?
Is product variety and “under the skin”
complexity the reason? Are the more
productive plants focussed on single / few
standardised products?
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5. Automation v/s Productivity
Productivity (hrs / veh)
80
70
60
50
40
30
20
10
0
0
10
20
30
40
Automation (% of automated assly steps)
J/J
J / NA
US / NA
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NIC
EUROPE
50
6. Automation v/s Productivity
Productivity (hrs / veh)
80
70
60
50
40
30
20
10
0
0
10
20
30
40
Automation (% of automated assly steps)
J/J
J / NA
US / NA
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NIC
EUROPE
50
7. Automation v/s Productivity
The hi-tech plants
End up adding many indirect technical and service
workers
Have a hard time maintaining high yield because
breakdowns in complex machinery reduce the
fraction of the total operating time that a plant
actually produces vehicles
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10. Toyota Kamigo # 9
Equipped with 20 year-old machines
Retrofitted
Preventive Maintenance 8 – 4 – 8 – 4
Set-ups in two mts.
Work Stations close to each other
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11. IBM
HV LC – IBM
3178 logic unit
Models
One
# of suppliers
Small
Part count
Small
WIP reduction
24 to 5 days
Space reduction
Sixfold
Labour reduction
Thirteenfold
Robots
Several
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12. IBM / HP
HV LC – IBM
LV LC – HP
3178 logic unit
PC touch screen
Models
One
Mixed
# of suppliers
Small
2,000 to 200
Part count
Small
20,000 to 450
WIP reduction
24 to 5 days
21 to 3 days
Space reduction
Sixfold
Fourfold
Labour reduction
Thirteenfold
Fourfold
Robots
Several
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13. General Principle
Do not put equipment simply to displace
labour
Equipment cannot think
or solve problems;
humans can
Equipment can be a problem;
labour can be an opportunity
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14. Economies of Scale
The economy-of-scale “law” is:
Bigger store, bigger restaurant, bigger
factory, bigger machine yields lower cost per unit
The six-tenths rule, viz. one large capacity line is
better than two or more small capacity lines in the
ratio six : ten
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15. Economies of Scale
A firm has a smash product – sales are on a
fast incline
The company is hiring; overtime, extra shifts
and weekend work are becoming normal; and
delivery lead times are stretching out
Looming on the horizon are lost sales
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19. Economies of Scale
Decision is made to add capacity
Engineering searches OEM’s catalogs; selects
latest large machines / lines – enough
capacity for five years of projected demand
growth
Machines are installed and debugged, which
takes several months owing to the large
machines’ complexities and needs for special
utility hookups
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23. Economies of Scale
The new capacity utilisation rate takes a
nosedive
Everyone is nervous
Marketing is under pressure
Launch advertising campaign
Cut prices
Design and sell something that will keep the
capacity busy
The machine has become the
master, dictating policy
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